November 24, 2020

SEC Settles Charges Against Investment Advisory Firms and Dually-Registered Broker-Dealer and Investment Adviser Firms Related to Sales of Complex Exchange-Traded Products

The SEC recently announced that it has entered into settlement agreements with three investment advisory firms and two dually-registered broker-dealer and advisory firms (the firms) related to the firms’ recommendations to retail investors of certain complex exchange-traded products (ETPs) linked to volatility benchmarks, including exchange-traded notes (ETNs) and exchange-traded funds…

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November 20, 2020

Compliance and Effective Dates Set for Final Rule and Related Amendments for Fund-of-Funds Arrangements

On November 19, 2020, the release reflecting the SEC’s adoption of Rule 12d1-4 (FoF Rule) under the 1940 Act and related amendments designed to implement a regulatory framework for investments by registered investment companies and business development companies (BDCs) (collectively, funds) in underlying funds was published in the Federal Register,…

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November 18, 2020

SEC Adopts Modernized Regulatory Framework for Derivatives Use by Registered Investment Companies and Business Development Companies

The SEC recently adopted Rule 18f-4 (Rule), and rule and form amendments under the Investment Company Act of 1940, as amended (1940 Act), designed to provide a modernized and comprehensive approach to the regulation of the use of derivatives and other financial instruments by registered investment companies and business development…

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October 29, 2020

SEC Staff’s Latest Dear CFO Letters Rescind or Modify Certain Existing Staff Positions and Express New Staff Positions

On October 23, 2020, the staff of the SEC Chief Accountant’s Office of the Division of Investment Management (Staff) issued its latest industry comment letters (Dear CFO Letters) directed to chief financial officers and independent public accountants of funds and business development companies (BDCs) regarding accounting- and auditing-related disclosure matters.

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October 22, 2020

SEC Adopts Final Rule and Related Amendments for Fund-of-Funds Arrangements

The SEC recently adopted a new rule, Rule 12d1-4 (FoF Rule), and related amendments designed to implement a regulatory framework for investments by registered investment companies and business development companies (BDCs) (collectively, funds) in underlying funds. The release adopting the amendments (Adopting Release) also rescinds Rule 12d1-2 (which applies to…

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October 9, 2020

SEC Reaches Settlement with Investment Adviser Regarding Recapture of Waived Fees and Reimbursed Expenses from Money Market Funds

The SEC reached a settlement with a registered investment adviser (Adviser) for making material misrepresentations regarding the expenses paid by four money market funds (Funds) that the Adviser managed, in connection with fund reimbursement of fees and expenses that the Adviser had waived or reimbursed during the period from January…

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October 5, 2020

SEC Settles Charges Against Investment Adviser for Unlawful Cross Trades

The SEC recently settled charges against a registered investment adviser that engaged in hundreds of impermissible cross trades, including principal transactions, between its client accounts. The SEC Order found that the investment adviser violated Sections 17(a)(1) and 17(a)(2) of the 1940 Act, and Rule 38a-1 thereunder, and Sections 206(3) and…

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July 8, 2020

Registered Fund Adviser and Affiliate Censured and Fined for Violations of Section 12(d)(1)(A) (Fund of Funds Limitations) and Compliance Rules

On July 2, 2020, the SEC entered into a settlement order with an adviser and its foreign affiliate (Order) involving violations of the fund-of-funds ownership restrictions in Section 12(d)(1)(A) of the 1940 Act and the compliance rules contained in Rule 38a-1 under the 1940 Act and Rule 206(4)-7 under the Advisers…

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June 26, 2020

Department of Labor Proposes Rule Affecting ESG Plan Investments

On June 23, 2020, the U.S. Department of Labor (DOL) proposed a rule intended to clarify ERISA plan fiduciaries’ responsibilities with respect to environmental, social and governance (ESG) investing. The proposal is designed in part to make clear that ERISA plan fiduciaries may not invest in ESG vehicles when they…

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May 15, 2020

ETF Sponsors Submit Letters to Major Exchanges Regarding ETP Categorization

On May 13, 2020, a group of six ETF sponsors submitted letters to Cboe Global Markets, Inc., NASDAQ, and Intercontinental Exchange Inc. (the parent of NYSE Arca) urging that each exchange adopt exchange listing rules or other means to categorize exchange-traded products (ETPs) differently (ETP Letter).  The ETP Letter proposes…

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